EURJPY Testing Key Level As EZ GDP Comes in Flat

EUR Under PressureThe Euro is seeing fresh selling pressure on Tuesday as traders digest the latest data out of the eurozone. One of the big themes which has developed at the start of 2024 is central bank pushback against rate-cut expectations. The Fed, BOE and ECB have all been active in trying to steer investors away from pre-empting rate cuts in coming months. The message is essentially that the battle against inflation is not yet over and rates will need to remain at restrictive levels for much longer than the current market projections suggest.Market Vs ECBWhile this messaging has fuelled a scaling back of near-term rate cut expectation, some players judge the guidance to merely be an attempt at avoiding rapid currency devaluations which can in turn feed into an uptick in inflation. Indeed, the bigger focus for many is the growth prospects in respective regions. While data has been holding up surprisingly well in the US, with GDP, labour market data and consumer data all beating forecasts recently, the story has not been the same elsewhere.Prelim Flash EZ GDP Flat Q/QIn the eurozone, for example, today’s prelim flash GDP came in at 0%, highlighting how vulnerable growth remains in the block. Against this backdrop, the market is likely to maintain a sense that rate cuts are coming sooner than the ECB says they are, keeping EUR vulnerable to further downside near-term.Technical ViewsEURJPYThe rally has stalled for now ahead of the 162.29 level with the market now correcting lower within the bull channel. Price is currently testing the key 159.35 level. Should we break below here, focus will shift to a test of the 155.40 level next, with the bull channel lows coming in ahead of that level as interim support. Interestingly, we have an active sell signal in the Signal Centre today set above market at 160.75, suggesting a preference to fade any rallies for a continuation lower.